The Bank of Ghana and the Central Bank of Kenya will pause cutting interest rates at their upcoming meetings and resume in May, a Reuters poll found on Thursday, as inflation challenges in the region suggest a cautionary stance for policymakers.
While central banks in countries directly in the firing line of U.S. President Donald Trump’s import tariffs pause or end cutting cycles, some in Africa are expected to cut between 125-400 basis points (bps) this year.
The Bank of Ghana (BOG) has cut rates by 300 bps since last year and the survey suggested rates would be cut 100 bps to 26.00% in May with another cut of 125 bps to 24.75% in the third quarter. The key rate was seen ending the year at 23.00%.
All but one of 10 analysts surveyed between March 20 and 26 expected the BOG to keep rates steady at its monetary policy meeting on Monday.
“In Ghana, we believe that inflation hovering well above target and recent FX weakness will lead the BOG to hold rates at 27.00%,” wrote Kevin Daly, managing director and senior economist at Goldman Sachs.
“That said, given the BOG’s history of premature monetary easing, the possibility of a cut cannot be completely ruled out.”
The case for pausing is similar in Kenya, where all but one analyst expect Kenya’s central bank to keep the benchmark rate on hold at 10.75%. The meeting in Nairobi is due on April 8.
Inflation in Kenya rose for a fourth month in a row in February, reaching 3.5%.
A 75 bps cut to 10.00% in May is expected, followed by a 50 bps cut in the third quarter that will see rates end the year at 9.50%. The Central Bank of Kenya has cut rates by 200 bps since August.
“Disinflation in coming months will motivate rate cuts in Kenya and Ghana,” Rafiq Raji, non-resident senior associate with the Africa programme at the Center for Strategic and International Studies in Washington D.C.
The Central Bank of Nigeria (CBN) is expected to keep rates unchanged at its meeting due next month through to end-June before cutting 150 bps to 26.00% in the third quarter and by 100 basis points to 25.00% in November.
Since the start of last year the CBN has hiked rates by 475 bps. Inflation there eased to 23.18% in February from 31.70% from a year earlier, a month after it rebased its Consumer Price Index to reflect changes in consumption patterns. (Reuters)
